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New fears emerge over potential housing bubble

It's not a surprise to many that housing prices are out of control in San Diego, but there are new indications of a bubble that could burst in the immediate future.

Amy Simon sensed it was time to cash in on her Carmel Valley home.

"My fear was the prices are really good, things are moving quickly, people still want to get into the area because of the schools, so I figured let's put it on the market and see," Simon said.

Her hunch paid off. She and her husband Eric bought the five-bedroom home in 2000 for about $567,000, where they raised two daughters.

The Simons sold the home last month for about $1.1 million.

"We decided to do it now because the market is super hot," Simon said.

Simon and many others don't know how long that heat will last.

A new study from Zillow ranked San Diego County as the nation's fourth most at risk for a housing bubble, which could lead to a crash.

A housing bubble occurs when people start throwing money into the housing market. That inflates prices, but once that money dries up, home values plummet because they aren't actually worth that much.

The last time the bubble burst, thousands of San Diegans defaulted on their loans and a recession began.

Adding to the fears of a bubble burst is San Diegans' ability to pay for homes.

Home prices are growing twice as fast as incomes. In October, the average price for a home in the county was $456,750 -- up 4 percent from last year, according to CoreLogic.

Meanwhile, wages average $52,000, up about two percent annually.

Real estate experts who spoke Thursday at the University of San Diego's Burnham-Moores Center for Real Estate said it's supply, and not speculation, pushing up prices.

"We're not even building the number of homes that we need, and there are still people choosing to live in far areas outside the county that can't afford San Diego," said Nathan Moeder of London Group Realty Advisors.

Simon said there are many new homes being built in Carmel Valley.

"I thought if I wait and they keep building, then I'm competing against all these new builds," Simon said.

Simon and her family are going to rent a townhouse until the price is right to buy their next home.